Laura is the second-generation CEO of a successful beverage company started by her father 25 years ago. She exudes a contagious enthusiasm for the business and articulates a clear vision for growing the family firm. When her father began thinking about leadership succession, the employees asked him to recruit Laura as their next CEO, and they love working for her.

Joe is a third-generation senior leader in a large manufacturing firm founded by his grandfather nearly 75 years ago. Joe is burned out and seems weighed down by the burden of overseeing the family enterprise. Employees don’t want to work for Joe, and one division of the family enterprise recently failed under his leadership.

Both Laura and Joe were educated at top universities, got work experience outside the family business, and are highly intelligent – three characteristics most often mentioned in the family business literature as important to next-generation leader success. So what’s the difference between Laura and Joe?

A recent article in Harvard Business Review suggests that how next-generation leaders are developed has an important impact on their success in the family firm (Fernández-Aráoz, Iqbal, & Ritter, 2015). The interviews on which that article was based revealed that the best family firms execute a thoughtful development plan for future leaders that includes real job responsibilities at varying levels of responsibility. Where that experience is gained – inside or outside the family business – did not seem to be a key factor.

One CEO indicated that his family firm no longer requires next-generation leaders to go outside the family business to establish a track record, but rather encourages them to work for the family business from the start. This finding is consistent with my own recent research of 100 next-generation family leaders which showed no statistically significant relationship between experience outside the family business and next-generation leadership effectiveness. My study showed that the more important factor was having experiences at work that challenged and stretched the developing next-generation leader.

A closer look at Laura and Joe supports this conclusion. Laura’s outside experience was gained in a job that required her to grow a business line for which she was responsible. She had to learn a wide variety of leadership skills including planning, influencing others, and adapting to changing market conditions. Joe, on the other hand, received superb training in a technical skill important to his family business, but in a position without real leadership responsibilities.

Here at The Family Business Consulting Group, we think gaining outside experience is often the right course for many next-generation leaders. It can increase the likelihood that they will receive objective feedback on their performance and provides an opportunity for them to prove themselves in a setting where their family name is not an issue. But in the right circumstances, they can also develop successfully working inside the family firm. It is not so much where the experience is gained, but rather the nature of the experience that makes the real difference.

The National Geographic Society with its famed National Geographic Magazine is a not-for-profit entity dating to 1888. Among its founders and first president was Gardiner Greene Hubbard, an attorney and financier. He helped to fund Alexander Graham Bell’s research that led Bell to being awarded the patent on the telephone in 1876. The next year, Bell married Hubbard’s daughter and after his father-in-law’s death, succeeded him as National Geographic Society president.

Gilbert Hovey Grosvenor became the Society’s first employee in 1899, and the next year, married the boss’s daughter. He was editor of the magazine for 51 years and served the Society as president and then chairman of the board. His son, Melville Bell Grosvenor, joined the family business in 1924, also served as president and editor, and in 1967 succeeded his father as board chair. His son, Gilbert Melville Grosvenor, joined the magazine in 1954, became editor in 1970, president in 1980 and was named chairman emeritus in 2010. He retired from the board in 2014 after 60 years of service.

His daughter, Alexandra Grosvenor Eller, MD, joined the National Geographic Board in 2009 and continues family stewardship of this important institution into its sixth generation.

An organization need not be a business to benefit from a family’s multigenerational nurturing commitment. And profit from the good done by the organization need not be in the form of dollars to the family who founded and developed the institution.

Many of our clients develop a family employment policy as part of continuity planning. Some of the components of this policy articulate the circumstances under which family members will be hired, compensated, appraised, promoted, and terminated. And often we are told that the family business must remain a meritocracy, where family members earn their positions, and should be treated the same as non-family employees.

This philosophy seems appropriate when often there is much at stake and all employees need to be competent and held accountable. Also, non-family employees want to see that there is opportunity for them, even when their last name is not on the door. Family businesses should be run professionally in order to perpetuate the business through future generations.

That said there are times when exceptions to employment protocol might, and even should be made. Vacation time is one topic that often comes up when next generation family members join the business. They are often just starting their careers and take a position that offers two weeks vacation. However in some cases family members are given one or two additional paid weeks vacation. Senior management permits this for a number of reasons that are in fact, defendable:

The family may have meetings about the business while they are on vacation.

Junior generation family members are often expected to take courses or attend conferences that are family-business related. These courses often take place on weekends.

Family members are often invited to weddings and other events hosted by co-workers or family business associates, that require travel on weekends. Often junior generation members are strongly encouraged by their parents and/or senior management to attend these events.

There are often ceremonies and celebrations that are business related, and family members are expected to attend as ambassadors of the business. These events often take them away from their families if travel is required.

Community events sometimes require representatives from the business to attend. These are typically in the evenings and again, are responsibilities that family members take on in addition to their day to day work responsibilities.

While all employees sometimes make commitments on behalf of the business that are outside of regular work hours, often for family members it adds up to several days or even weeks in a year. Therefore, consideration is given to additional vacation time in an effort to make up for the significant investment made to work related commitments.

Business families are increasingly composed of global citizens. It is not unusual for cousins who share ownership in a business or who share other financial assets to have grown up in different countries, to have been educated in different school systems, and even to have different religions.

How then to promote alignment around policies, plans and strategies when such globalization may introduce significant geographic dispersion and cultural diversity?

Some thoughts:

Develop an intentional plan to ensure that different family members spend enough time together to understand and strive toward a common family culture.

Increase the frequency of family meetings.

Encourage cross cultural and cross demographic sharing of personal and business experiences.

Average life span has increased from 46.3 years (men) and 48.3 years (women) in 1900, to 77.4 years (men) and 82.2 years (women) in 2013.

Family members have different views on what IS family.

Nearly four-in-ten survey respondents (39%) say that marriage is obsolete; in 1978 when Time magazine posed this question to registered voters, just 28% agreed.

86% of respondents say a single parent and child constitute a family; 80% say an unmarried couple living together with a child is a family; and 63% say a gay or lesbian couple raising a child is a family.

Families LOOK different.

Rates of intermarriage have doubled since 1980.

About 50% of U.S. marriages end in divorce.

Good engagement with, and effective implementation of a family’s structures, policies and plans will be enhanced by recognizing the increased diversity that these demographic trends foretell.

Multiple active generations in the same room at the same time, multiple ethnicities and religions, and multiple views of exactly what constitutes “family” will require greater flexibility and tolerance on the part of all generations in a family.

When a large family was moving into its fifth generation of adults, their Family Council knew it was time to invest in future shareholder development.

The family had 20 fifth-generation future owners and beneficiaries who ranged in age from 14 to 39 (plus several more who were younger) and were geographically dispersed. There were also a few members in that same age range from the fourth generation. Some relatives had worked for the company in summer jobs, but most had not. Some attended shareholder meetings and many did not.

Faced with these challenges, the Council asked themselves: “How do you educate the family, and on what?”

They agreed to form an Owner Development Committee consisting of five fifth-generation members and one fourth-generation member. The mission was to research and design their own education program. Over the course of nine months, the committee organized their recommendations into four segments:

1) What should we do together? Seeing as some family members barely knew their cousins, the committee recognized that teamwork development was necessary to become a unified shareholder group. They decided to set aside one day prior to the annual shareholders’ meeting to conduct group programs. In turn, this would naturally increase attendance for the shareholder meetings. Programs would be oriented toward the whole group, but the day would also have three breakout sessions with age-appropriate content aimed (1) at the teens, (2) the college-aged group and (3) the older cousins. Programming would include tours, management presentations and education about the company. There would also be projects, plans and decisions requiring collaboration, leadership, organization and accountability. By learning and accomplishing projects together, they reasoned that teamwork would develop as they achieved their desired educational goals.

2) What body of knowledge and skills do we need to master? The committee identified subject areas based on their research drawn from attending family business seminars, speaking with other business families and reading related materials. Skill and knowledge areas included financial statements, investing, communication and negotiating skills, knowledge of their business and industry, family values and history, business strategy, and an understanding of the role of the board, shareholders, family governance and management.

3) What education should we provide and what should individuals learn on their own? Next, the committee defined what individuals are expected to learn on their own (primarily from books, articles and seminars), what will be provided to the group (customized programs presented by other business families, speakers and trainers), or made available to attend (seminars, courses and training programs). For the seminars and other resources, they established rules and procedures to address education costs and set expectations about expenses covered by family members.

4) How do we implement? Understanding that implementing all the educational initiatives at once would be overwhelming, they designed a multi-year, roll out strategy. The first step was introducing the one day, pre-shareholder meeting to inform everybody of the curriculum and obtain buy-in.

The committee presented their recommendations to the Family Council, and then to the entire family at a family assembly meeting where they received unanimous support.

In my family, we don’t wait for the basketball madness to start in March.

Last weekend, we watched the NBA all-star game and three-point shooting contest. Next week, my youngest son starts his high school basketball post-season playoffs. And next month during his spring break, we are taking a trip scheduled around a particular NBA game. Needless to say, at home we are talking a lot about players, teams and teamwork.

I don’t talk to my family much about Family Council teamwork, but I think about it a lot and see it firsthand every week. Like a basketball team, the best Family Councils are teams with the right skills and attitudes. Larger families with many choices have the luxury of selecting their best talent. Business families who include spouses as candidates for the Family Council expand their talent pool.

When assembling the Family Council dream team, pick at least one who can be the Chair to galvanize and manage the team. He or she communicates well, facilitates, never bosses -yet can be directive when needed – and is great with follow up so that individuals are accountable. This team manager is the kind of person who can make a good idea seem like everyone’s and can tell the truth about what’s going on without an uncomfortable confrontation.

The chair is joined by some great teammates, all of whom:

Get things done by keeping conference call appointments and taking responsibility for Family Council tasks/projects without over-committing.

Can be flexible and adaptable about the family’s changing needs, yet be rigidly firm on values.

Understand the differences between the roles of shareholder, board, management and family and can respect the boundaries.

Have the spunk to decide what is right, rather than siding with an individual or family group (especially their own).

Are capable of working with differences among individuals, branches and generations.

Can inform, listen, respect and build trusting relationships across family branches.

Have the diplomacy to keep their mouth shut about sensitive matters but love to blab with the best of them on everything else the Family Council is doing.

Can respect, support and help the Chair accomplish the difficult, underpaid, cat-herding job – instead of pushing the buttons of their courageous brother, cousin, aunt, uncle, niece, nephew, father, mother or sister who agreed to do it.

Spending our lives in business or family meetings is a huge commitment of time and energy. In order to make those meetings most effective, we do best when we pay particular attention to the degree of past, present and future focus in meeting time.

In board meetings, often a pattern of focus on past performance develops into an expectation of what board meetings should be. At some point, the board begins getting frustrated that too much time is being spent on last quarter and not enough attention is being given to issues facing the company in the present, or future. This tension can bubble up and cause the board to question its meeting practices. Usually this results in movement towards a stronger and more robust board meeting process, with greater focus on responding to today and planning for tomorrow

Shareholder groups often experience this same pattern: the shareholder meeting consists mainly of a review of what has happened in the past. This may continue for a few years, but at some point as the shareholders begin to get anxious about the future. They begin to ask where they are going as a group, and how the entity or the assets they own will help them achieve their goals. Just as in boards, a process of meeting renewal frequently results in a shift of focus to primarily present concerns and future direction.

While it is easy drop into routines and use templates that can be repeated from meeting to meeting, engagement will typically be higher when the board, shareholder group, or even a family group (for those of you hold family meetings) ask the question: “What is our ideal balance of focusing on past performance and history, present situations and pressing conditions, and future direction and strategic intent?”

Over the years in which I have consulted with families, I have observed an important, and encouraging, pattern in numerous families whereby the senior generation – despite substantial tensions and challenges in working together – offers the junior generation an opportunity to have relationships unspoiled by the challenges of their parents.

It goes something like this…

The senior generation, often a sibling generation, struggles with managing the emotional aspects of being in a family business together. These struggles are not uncommon, and often simply due to the pressures of being a family together, working with their parents and facing the stresses of the day. Over time, they become overly sensitive to comments or actions that were not intended to cause pain but do nonetheless.

It would be typical that these frustrations would turn into toxicity, which is then shared with their children – the next generation. But in many families something beautiful happens. The senior generation members, recognizing the value of their collective children building supportive and nurturing relationships, suppress their own frustrations and insulate the next generation from daily dramas, allowing the junior generation emotional space to become friends and build relationships. The result is a group of cousins who enjoy their relationships and their time together, often independent of the parents’ participation. In these cases, the collective sense of family created among the cousin group is a powerful force.

Being in a family is sometimes messy and intense. As human beings, we are not perfect. Many of us have emotional nerve endings close to the surface. We get hurt. We want to attribute the source of pain and frequently look outward for causes. In the worst of cases, we blame others for the entire balance of the messy relationship and are blind to our own part in the drama. In our frustration, we may even disparage our family members to our children, and even to their children. This creates division within the family.

When the individuals within a generation commit to nurturing the junior generation despite their own pains and the complications associated with the complexities of being in an enterprising family, a great gift is truly given.

Editor’s note: A frequent question we hear from business families regarding family governance is: “Where do we start?” The following is a selection of articles and other resources that can be helpful in thinking about the role family governance might play in your family.

As family business advisors, we have been recommending to our clients that they form family councils for decades. In fact, councils are often considered the sine qua non for all families who own businesses together, particularly if the business has been around for more than a generation. But who really needs a family council, and what exactly is one?Read more…